PRESENTED TO: SIR NAZIM

PRESENTED BY: AYESHA AHMED

KAZIM ALI
MOIZ KHAN
WASEEM SADIQ
ASIF

WHICH ONE IS BETTER TO

INVEST, FATIMA FERTILIZER
OR FAUJI FERTILIZER?

Working Capital
2008
Current Assets

2009

2010

2011

9,709,511 14,917,456 17,223,642 27,636,405

Current Liabilities

11,823,641 17,854,574 19,987,109 25,924,328

Working Capital

-2,114,130 -2,937,118 -2,763,467 1,712,077

2008
Current Assets

2009

2010

2011

892,413 2,216,453 4,498,680 8,126,119

Current Liabilities

3,505,688 4,660,938 7,074,260 10,757,984

Working Capital

-2,613,275 -2,444,485 -2,575,580 -2,631,865

Working Capital
2,000,000

1,000,000

0
2008

-1,000,000

-2,000,000

-3,000,000

-4,000,000

2009

2010

2011

Fauiji
Fatima

 Negative working capital means that a company

currently is unable to meet its short-term liabilities

with its current assets .If a company's current assets do
not exceed its current liabilities, then it may run into
trouble paying back creditors in the short term. The
worst-case scenario is bankruptcy. Working capitals
for both companies i.e. Fauji and Fatima Fertilizer have
declining working capital ratio and faujis working
capital increased in 2011 than previous year
2010.Fatima fertilizer has been facing problems in
paying their dues.

Current Ratio
2008
Current Assets
Current Liabilities
Current Ratio

2009

2010

2011

9,709,511 14,917,456 17,223,642 27,636,405

11,823,641 17,854,574 19,987,109 25,924,328
0.82

0.84

0.86

1.07

Current Ratio
2008
Current Assets
Current Liabilities
Current Ratio

2009

2010

2011

892,413 2,216,453 4,498,680 8,126,119

3,505,688 4,660,938 7,074,260 10,757,984
0.25

0.48

0.64

0.76

Current Ratio
1.20
1.07
1.00
0.86

0.84

0.82
0.80

0.76

0.64
Fuiji

0.60

Fatima
0.48
0.40

0.25
0.20

0.00
2008

2009

2010

2011

 The Current ratio is the measure of general liquidity in

the firm . For both companies i.e. Fauji Fertilizer and

Fatima Fertilizer, The current ratio of 2011 is slightly
higher than that of 2010 which means that in 2011 the
company will be much more in good position to pay
the debt in the next coming year. In above comparative
graph, you can easily judge that Fauji Fertilizer is in
better position than Fatima Fertilizer.

Quick Ratio
2008
Current Assets

2009

2010

2011

9,709,511 14,917,456 17,223,642 27,636,405

Stock in Trade

258,094

144,087

211,720

636,923

Deposits & Prepayments

107,369

37,653

50,188

53,852

365,463

181,740

261,908

690,775

Current Liabilities
Quick Ratio

11,823,641 17,854,574 19,987,109 25,924,328

0.79

0.83

0.85

1.04

Quick Ratio
2008

2009

2010

2011

Current Assets

892,413

2,216,453

4,498,680

8,126,119

Stock in Trade

539,730

1,215,014

410,752

849,238

939,864

945,225

410,752

849,238

1,479,594

2,160,239

3,505,688

4,660,938

0.14

0.29

Deposits & Prepayments

Current Liabilities
Quick Ratio

7,074,260 10,757,984
0.43

0.55

Quick Ratio

1.20

1.04
1.00

0.85

0.83
0.80

0.79

0.60

0.55

Fuiji
Fatima

0.43
0.40
0.29

0.20

0.14

2008

2009

2010

2011

 Quick Ratio is an indicator of a company's short-term

liquidity. The quick ratio measures a company's ability

to meet its short-term obligations with its most liquid
assets. The higher the quick ratio, the better the
position of the company. In above calculation you can
observe that Quick Ratio of Fauji Fertilizer is better
than Fatima Fertilizer, it is increased from 0.85 to 1.04
which is shows good sign or improvement and shows
ability to meet its short-term obligations with most its
liquid assets.

Inventory Turnover
Cost of Goods Sold
Average Stock in Trade
Inventory Turnover

2008
2009
2010
2011
18,234,692 20,515,044 25,310,406 20,871,759
258,094 201,091 177,904 424,322
70.65
102.02
142.27
49.19
Total Asset Turnover

Cost of Goods Sold

Average Total Assets
Total Asset Turnover

2008
2009
2010
2011
18,234,692 20,515,044 25,310,406 20,871,759
31,918,963 35,235,273 40,806,219 49,295,886
0.57
0.58
0.62
0.42

Non Current Asset Turnover

Cost of Goods Sold
Average Non Current Assets
Non Current Asset Turnover

2008
2009
2010
2011
18,234,692 20,515,044 25,310,406 20,871,759
22,209,452 22,921,789 24,735,670 26,865,863
0.82
0.90
1.02
0.78

Current Asset Turnover

Cost of Goods Sold
Average Current Assets
Current Asset Turnover

2008
2009
2010
2011
18,234,692 20,515,044 25,310,406 20,871,759
9,709,511 12313484 14917456 22430024
1.88
1.67
1.70
0.93

Working Capital Turnover

Cost of Goods Sold
Average Working Capital
Working Capital Capital

2008
2009
2010
2011
18,234,692 20,515,044 25,310,406 20,871,759
-2,114,130 -2525624 -2850293 -525695
-8.63
-8.12
-8.88
-39.70

 The activity analysis ratios are also called the Turnover

ratios or Performance ratios. These ratios are

computed to assess the efficiency with which the firm
manages and utilizes its assets. These ratios usually
indicate the frequency of sales with respect to its
assets. These ratios are usually calculated with
reference to sales/cost of goods sold and are expressed
in terms of rates or times. Fauji fertilizer shows
improvement in their activity ratio. Activity ratio for
Fatima Fertilizer is not possible due to the fact that
values are not given in Financial Statement

Gross Profit Margin

Gross Profit
Net Sales
Gross Profit Margin

2008
2009
2010
2011
12,358,114 15,648,130 19,563,953 34,349,409
30,592,806 36,163,174 44,874,359 55,221,168
40%
43%
44%
62%
Net Margin

EAT
Net Sales
Net Margin

2008
2009
2010
2011
6,525,083 8,823,106 11,028,849 22,492,053
30,592,806 36,163,174 44,874,359 55,221,168
21%
24%
25%
41%

Operating Margin
EBIT
Net Sales
Operating Margin

2008
2009
2010
2011
8,098,525 10,256,230 13,156,739 26,536,552
30,592,806 36,163,174 44,874,359 55,221,168
26%
28%
29%
48%
Operating Expense Ratio

Operating Expense
Net Sales
Operating Expense Ratio

2008
2009
2010
2011
895,647 1,272,448 1,376,000 2,654,881
30,592,806 36,163,174 44,874,359 55,221,168
3%
4%
3%
5%
Cost of Goods Sold Ratio

COGS
Net Sales
COGS Ratio

2008
2009
2010
2011
18,234,692 20,515,044 25,310,406 20,871,759
30,592,806 36,163,174 44,874,359 55,221,168
60%
57%
56%
38%

Operating Ratio
COGS
Operating Expense
Net Sales
Operating Ratio

2008
2009
2010
2011
18,234,692 20,515,044 25,310,406 20,871,759
895,647 1,272,448 1,376,000 2,654,881
30,592,806 36,163,174 44,874,359 55,221,168
63%
60%
59%
43%

 DEBT RATIO
Years
Total Debts
Total Assets
Ratios

2008
19,633,750
31,918,963
0.62

2009
25,469,140
38,551,582
0.66

2010
27,613,309
43,060,856
0.64

2011
32,460,692
55,530,916
0.58

Years
Total Debts
Total Assets
Ratios

2008
2009
2010
2011
22,752,404 39,459,744 45,198,258 48,292,383
38,097,748 57,202,532 69,457,038 76,347,248
0.60
0.69
0.65
0.63

Debt Ratio
70%
69%
68%
66%
66%

65%
64%

64%

62%

63%

62%
Fuiji

60%

Fatima

60%
58%

58%

56%

54%

52%
2008

2009

2010

2011

 Debt ratio should be less than 1.0, both Fauji & fatima

fertilizer having less than 1 . The higher values are

respectively the signal of excessive debt. Although it is
decreased a little but still it is alarming situation. For
the case of Fatima fertilizer. Fauji fertilizer is at better
position than Fatima fertilizer.

Years
LTD
SHE
Ratio

2008
2009
2010
2011
7,810,109 7,614,566 7,626,200 6,536,364
12,285,213 13,082,442 15,447,547 23,070,224
0.64
0.58
0.49
0.28

Years
LTD
SHE
Ratio

2008
2009
2010
2011
19,246,716 34,798,806 38,123,998 37,534,399
15,345,344 17,742,788 24,258,780 28,054,865
1.25
1.96
1.57
1.34

Debt to Equity Ratio

250%

196%

200%

157%
150%
134%

125%

Fuiji
Fatima

100%

64%

58%
49%

50%

28%

0%
2008

2009

2010

2011

Years
Total Debts
SHE
Ratio

2008
19,633,750
12,285,213
1.60

2009
25,469,140
13,082,442
1.95

2010
27,613,309
15,447,547
1.79

2011
32,460,692
23,070,224
1.41

Years
Total Debts
SHE
Ratio

2008
2009
2010
2011
22,752,404 39,459,744 45,198,258 48,292,383
15,345,344 17,742,788 24,258,780 28,054,865
1.48
2.22
1.86
1.72

Total Debt to Equity Ratio

250%
222%

195%

200%

186%
179%
172%
160%
150%

148%
141%
Fuiji
Fatima

100%

50%

0%
2008

2009

2010

2011

 Total Debt to equity ratio indicates a capacity to

borrow additional fund by having low value of Debt to

Equity ratio. This is ideal situation for Fauji fertilizer
because 1.79 and 1.49 for the year 2010 and 2011
respectively. Fauji fertilizer is also in better condition
than Fatima fertilizer because value of Debt to Equity
ratio is still very low as compared to Fatima fertilizer

Years
EBIT
Interest
Ratio

Years
EBIT
Interest
Ratio

2008
2009
2010
2011
9,689,543 12,473,625 15,619,480 29,977,258
695,371
944,947 1,086,741
785,825
13.93
13.20
14.37
38.15

2008

2009

2010

#DIV/0!

#DIV/0!

#DIV/0!

2011
9,150,623
3,063,055
2.99

 The times interest earned ratio indicates how well the

firm's earnings can cover the interest payments on its

debt. This ratio also is known as the interest coverage.
By having lower values it shows that company has very
low capability to pay interest charges. Fauji fertilizer is
in stable condition as compared to Fatima fertilizer,
because it have much higher value of Times interest
earned ration, whereas Fatima does not have any
capability to pay interest charges by having lesser
value.

 RETURN ON ASSET
Years
EAT
Average Total Asset
Ratios

2008
2009
2010
2011
6,525,083
8,823,106 11,028,849 22,492,053
31,918,963 38,551,582 43,060,856 55,530,916
20%
23%
26%
41%

Years
EAT
Average Total Asset
Ratios

2008
2009
2010
2011
(144,195)
(97,121) (163,639) 4,116,975
38,097,748 57,202,532 69,457,038 76,347,248
-0.38%
-0.17%
-0.24%
5.39%

Return on Assets
25%

20%
20%

15%

11%
Fuiji

10%

Fatima
7%

6%
5%

2%

0%
2008 0%

-5%

2009 0%

2010 0%

2011

 Return on assets is a measure of how effectively the

firm's assets are being used to generate profits. By

having positive value means that company's assets are
greater than its profit. For Fauji fertilizer the value of
Return on Total Assets increased. It shows a little
improvement but higher value is better for company
and trend should be upward. For Fatima
fertilizer Negative ratio shows that company is in loss.
Company has to pay interest cost from its asset

Years
EAT
Average SHE
Ratio

2008
2009
2010
2011
6,525,083 8,823,106 11,028,849 22,492,053
12,285,213 13,082,442 15,447,547 23,070,224
53%
67%
71%
97%

Years
EAT
Average SHE
Ratio

2008
2009
2010
2011
(144,195)
(97,121) (163,639) 4,116,975
15,345,344 17,742,788 24,258,780 28,054,865
-0.94%
-0.55%
-0.67%
14.67%

Return on Shareholder Equity

60%
53%

50%

40%

29%

30%

Fuiji
Fatima
19%

20%

17%
15%

10%

0%
2008 -1%

-10%

2009 -1%

2010 -1%

2011

 Return on equity is the bottom line measure for the

shareholders, measuring the profits earned for each

dollar invested in the firm's stock. Fauji fertilizer by
having positive Return on Equity (ROE) shows that
stockholders are getting profit from company,
although it is very minimal but trend is going upward.
Fauji fertilizer must increase its net profit margin to
have better ROE and to gain investor trust. Fatima
fertilizer is in very bad situation, having negative ratio
shows that company is in loss. Company has to pay
interest cost from its assets